Oil futures: Brent down 6% on week as war premium fades

Quantum Commodity Intelligence – Crude oil futures fell on Friday after weaker-than-expected US jobs data and waning geopolitical risk sentiment, heading for its second weekly decline. 

Front-month Jan23 ICE Brent futures were trading at $84.80/b (1800 GMT), compared to the day's high of $87.80 and Thursday's settle of $86.85/b.

At the same time Dec23 NYMEX WTI was trading $80.40/b versus Thursday's settle of $82.46/b.

Markets were heading for 6% weekly losses after retreating earlier in the week. Last Friday, Dec23 Brent closed at $90.48/b, while WTI settled at $85.54/b.

Crude prices are now back below levels since before the 7 October Hamas attacks in Israel sparked concerns over a wider regional conflict and its impact on Middle East supply. 

A much-anticipated speech by Hezbollah leader Hassan Nasrallah on Friday, speaking for the first time since the conflict erupted, warned "all possibilities" remained open but fell short of calling for another front on Israel's border with Lebanon.

The US House of Representatives meanwhile passed a bill on Friday to tighten sanctions for Hezbollah's backers - Iran - where exports have reached up to 3.4 million bpd in recent months. 

Benchmarks eased from Thursday's highs after US nonfarm payrolls increased by 150,000 for October but missed forecasts for a rise of 170,000. Unemployment increased to 3.9%, the highest level since January 2022.

Markets have largely held the gains registered during the second half of the week, with analysts saying there were signs that the worst of the bear run was over, including the weaker dollar lending support for commodities.

"The weaker US dollar along with the broader improvement in the risk mood is helping to boost oil prices, as optimism about the demand outlook improves from the pessimism at the start of the week," said Michael Hewson of CMC Markets, commenting on the end-week rebound.

The Federal Reserve kept interest rates at 5.25-5.50% this week, in line with expectations, while US growth expectations were seen moving from 'solid' to 'strong'.

The Dollar Index has slipped back towards 105 points, having topped out at yearly highs above 107 points midweek.